Nov 23, 2012

After years of almost unchallenged dominance, China’s influence in Myanmar is under threat as the United States and other nations seek closer ties with the former pariah state, experts say.

The Asian economic powerhouse has long helped keep Myanmar afloat through trade ties, arms sales, and by shielding it from UN sanctions over rights abuses as a veto-wielding, permanent member of the Security Council.

In return, China was assured of a stable neighbour and access to Myanmar’s oil, gas and other natural resources.

But since Myanmar’s military ceded power last year, China has lost some of its leverage over the country formerly known as Burma.

European and US firms are no longer banned from doing business there, leaving them scrambling to catch up with rivals from China, India and elsewhere in Asia in the competition for its resources and consumer markets.

US President Barack Obama’s historic visit to Yangon this week was the clearest indication yet of the sea change in relations under way between Washington and Myanmar.

Myanmar is now in the process of reversing its long-standing dependence on Beijing, said Renaud Egreteau, a Myanmar expert at the University of Hong Kong.

“It’s clear that the monopoly era is finished,” he said, while adding that “strong influence will remain.”

The US diplomatic offensive, part of a strategic “tilt” towards the Pacific in the face of a rising China, became clear with a visit by US Secretary of State Hillary Clinton a year ago and has frayed nerves in Beijing.

“America will use more non-military means to slow or obstruct China’s rise,” according to Yuan Peng, director of the China Institute of Contemporary International Affairs.

Washington will pursue its goal “by strengthening alliances and upgrading partnerships and driving wedges in China’s relationships with North Korea, Pakistan and Myanmar,” he wrote in a commentary earlier this year.

China and Myanmar’s “deep-seated” relationship will not disappear overnight, however, said Professor Chen Qi, a foreign relations expert at Tsinghua University in Beijing.

“If Myanmar is gaining international support, then China will need greater diplomatic skill to maintain its relationship.”

It is not just in the realm of diplomacy that the United States is vying for China’s crown, analysts say. The end of Beijing’s diplomatic monopoly has also ruffled the feathers of Chinese traders who made themselves at home there.

“They didn’t face any competition in Myanmar for more than two decades under the dictatorship. They could do whatever they wanted at that time,” said Aung Kyaw Zaw, a Myanmar dissident intellectual who lives on the border.

The shift has also affected major Chinese-backed development projects.

In September 2011, President Thein Sein ordered a halt to work on a controversial hydropower project in the northern state of Kachin that was due to produce electricity for export to the northern neighbour.

The move, hailed by the West as a rare concession by the regime after a public outcry, was seen as a turning point in relations.

For more than 20 years, according to researcher Josh Gordon of Yale University, the Chinese enjoyed excellent relations with Myanmar’s rulers while largely avoiding contact with civil society groups and local communities.

Now they have been forced to reconsider their methods, in a country where anti-Chinese sentiment is virulent.

“Myanmar has a xenophobic political culture and so this exacerbates its reaction to China’s rise and influence in the country,” Gordon said.

But he believed that Chinese business, which has inundated Myanmar’s population of 60 million with consumer goods, would find a new way to prosper.

“Chinese infrastructure and large-scale projects may decrease in relative importance as other players come in,” he said. “But the US is not going to take over the market for cheap plastic chairs in Myanmar any time soon.”

Cities like Mandalay have long welcomed legions of Chinese traders and businessmen.

Nowadays US firms like Pepsi and Coca-Cola are not their only rivals — Japan and its corporations see Myanmar as fertile ground to grow their operations in the face of a weak domestic economy squeezed by a shrinking population.

Coupled with aid pledges and joint economic development projects, “Japan is the quiet but big mover,” said Sean Turnell, an expert at Australia’s Macquarie University.